Sustained Outrage

Oil and gas drillers object to higher permit fees

Here’s the latest from Vicki Smith at The Associated Press:

MORGANTOWN, W.Va. — Two groups that represent natural gas drillers say permit fees a legislative subcommittee is proposing for Marcellus shale wells are astronomically high and “an absolute deal-stopper” that could discourage or even cripple the fast-growing industry.

The West Virginia Oil and Natural Gas Association and the state’s Independent Oil & Gas Association also object to proposed restrictions on drilling locations that they believe are based on opinion and speculation rather than science — or simply cut and pasted from laws on the books in other states.

“I stopped reading when I got to ‘the waters of the commonwealth,”’ said Corky DeMarco, executive director of WVONGA.

Pennsylvania and Virginia are called commonwealths. West Virginia is a state.

The 90-page draft bill presented to members of a joint judiciary subcommittee earlier this week would impose four permit fees ranging from $5,000 to $15,000 per well, as well as individual performance bonds of $25,000 per well.

The permit fees include $15,000 for the initial application, $10,000 to modify an existing permit, $5,000 for annual renewals and a $15,000 reclamation fee that would be required before any permit is issued.

“That level of permitting is an absolute deal-stopper. It could shut the industry down in the state,” IOGA director Charlie Burd said.


The fees are “astronomical increases” over the roughly $600 drillers now pay for conventional shallow well permits, Burd said, and many times what other states charge drillers of the deep, unconventional Marcellus wells.

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WVDEP’s ‘rough and raw’ drilling legislation

Well site during active drilling to the Marcelllus Shale formation in Upshur County, West Virginia, in 2008. Photo copyright West Virginia Surface Owners Rights Organization.

Vicki Smith over at The Associated Press had the story the other day summarizing the latest draft of oil-and-gas drilling legislation under consideration by the West Virginia Department of Environmental Protection:

The Department of Environmental Protection wants natural gas companies to submit comprehensive water management plans, including lists of chemicals to be used, when applying for future permits to drill horizontal wells in the Marcellus shale field.

A 100-page draft of proposed legislation provided to The Associated Press late Friday shows the DEP wants companies to identify not only when, where and how much water they withdraw for drilling operations. The department also wants to know what chemicals companies use in hydraulic fracturing, how much wastewater they produce, and when and where they would dispose of the waste.

This is all part of a review of the WVDEP’s handling of oil and gas issues launched by agency Secretary Randy Huffman a while back.

I’ve had a couple of requests for copies of the draft legislation that Vicki wrote about, and WVDEP spokeswoman Kathy Cosco was kind enough last week to provide a copy to the Gazette. It’s not clear if WVDEP plans to post the document on the agency’s Web site. I asked Kathy about that and she told me:

This is a very rough draft of legislation DEP is trying to pursue. Because we expect it will change a few times before we actually submit it to the legislature, I don’t know if we will be posting it yet or not. I’ll have to get back to you on that.

So what the heck … I’ll just go ahead and post the 100-page document here.

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NY’s former top environmental official talks fracturing

Today’s must-read is an interview by ProPublica’s Marie C. Baca with Pete Grannis, who, until he was fired last month, was commissioner of New York State’s Department of Environmental Conservation. While in office, Grannis created the first fracturing chemical disclosure rules in the country.

With some of the northernmost reaches of the Marcellus shale formation located in New York, Grannis has dealt with many of the same issues confronting regulators in West Virginia. (See previous coverage here, here, here, here and here.)

Here are a few questions and answers, but I encourage anyone interested to read the entire interview, which occurred over two sessions.

What was it like to balance two mandates from the state: to protect New York’s environment, and to develop those resources for profit?

Well, there are obviously pressures on both sides. My job as a regulator was to make sure that legal activity took place in a way that didn’t harm the environment. We really committed huge resources to making sure that if this process is to proceed it will be done safely. … We were very clear that we weren’t going to rush ahead and then wonder if we did it right later on.

But in the summer of 2008, the DEC seemed prepared to issue permits for hydraulic fracturing without exploring the possibility of water contamination or having a clear idea of how drillers would treat the wastewater.

That is not true. Right from the beginning we understood that this issue required additional review. We were under no obligation to push for something beyond the generic environmental impact statement, but we felt like it was the right thing to do. Some of the accusations you’re talking about have been extraordinary, but the truth is that the department has a phenomenal track record of regulating drilling, and we’ve set the most stringent standards in the country for hydraulic fracturing.

Was there ever a time when you felt the dual mandates from the state created a conflict for you?

For most of my environmental stakeholders, the people I know and work with, there was near-universal condemnation of the possibility of drilling. I felt tremendous pressure from friends and colleagues to make sure this was done right. On the other hand, the landowners in some of these poor communities across the southern tier saw [drilling] as a salvation. They were sold a bill of goods that their payments were contingent upon drilling activities beginning sooner. They were putting pressure on us, the administration and their local legislators, to move more quickly. But I never thought of it as a real conflict. I knew very clearly what our responsibilities were. I knew there was this divide between the fact that this was a legal activity and the fact that it has considerable disruptive potential. This drilling is an unattractive, disruptive, commercial activity with requirements that need to be met. I was never in any doubt that if we found a path forward it would be in a way that didn’t affect the environment.

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WVDEP, WVDNR react to Chief Logan ruling

We did a quick blog post yesterday to let readers know about the state Supreme Court’s ruling that paves the way for oil and gas drilling in Chief Logan State Park.

There’s more in today’s Gazette, with a complete news story on this important decision.

But I also wanted to pass on reactions from the West Virginia Department of Environmental Protection, whose decision to block this drilling was overturned by the Supreme Court, and by the state Division of Natural Resources, whose ability to protect park lands could be hampered by this ruling.

WVDEP spokeswoman Kathy Cosco had this to say yesterday:

The DEP’s argument in this case was that the Secretary has the authority to rely on other agencies environmental statutes when determining the issuance of permits. The court did not speak to that issue in this ruling, so we believe that should a similar case come up in the future the agency can still exercise that authority.

And WVDNR spokesman Hoy Murphy said only this:

We are reviewing the court’s decision to determine what effect it may have on DNR’s statutory duties to protect state parks.

In addition, I asked Tom Susman, a spokesman for Cabot Oil and Gas and the Lawson Heirs, when the drilling is scheduled to begin, and this is what he told me:

They just got the ruling and are reviewing it. There are no timelines at this point.

Supreme Court paves way for Chief Logan drilling

The West Virginia state Supreme Court of Appeals has just issued an opinion that affirms a Logan Circuit Court decision paving the way for oil and gas drilling at Chief Logan State Park.

Justices ruled that a state law that bans such drilling does not apply, because it was enacted after a 1960 deed in which previous owners of the property preserved their mineral rights and the right to drill for oil and gas.

You can read the opinion here.

West Virginia’s Supreme Court is scheduled tomorrow to hear an important case over the future of our state parks. Justices will consider an appeal of the June 2009 ruling by Logan Circuit Judge Roger Perry to allow natural gas drilling in Chief Logan State Park.

We’ve covered this issue before here, here, here and here, and also noted that this may be part of a larger push for more gas drilling on West Virginia’s public lands.

At tomorrow’s argument, the state Department of Environmental Protection will ask the justices to overturn Perry’s ruling, which itself overturned an earlier decision by DEP to deny drilling permits sought by Cabot Oil and Gas.  In December 2007, then-DEP Secretary Stephanie Timmermeyer turned down Cabot’s applications, citing a section of state law that prohibits mineral extraction in state parks.

In a legal brief available online here, the DEP argues that Judge Perry was wrong to conclude that the agency had no authority to use that section of state law — which is actually included a section spelling out duties of the state Division of Natural Resources in overseeing parks — to deny Cabot’s drilling permits:

This matter boils down to fourteen words in a statute, section 20-5-2(b)(8) of the West Virginia Code, which instructs that the State “may not permit … the exploitation of minerals … for commercial purposes … in any state park.” There is nothing ambiguous or unclear about this statutory prohibition. The law does not provide that the State may only prevent the commercial exploitation of coal, oil, or natural gas within one of its parks if it happens to own the minerals itself, or that it must permit extraction if there have long been operating wells in the subject park or in others, or that the bar is without effect if the State has previously acquiesced in a deed or contract. To the contrary, the Legislature plainly decreed that, from the point at which it acted, no exploitation of minerals in any state park is to be allowed.

… The words are there in black and white, there is no gray.

In enforcing oil and gas laws, the DEP argues, agency officials are required by law to do so in a manner that “supplements and complements” the environmental policies and programs of other West Virginia agencies:

Thus, if DNR is prohibited by law from allowing the exploitation of natural resources underlying a State park because the Legislature has made a judgment that this sort of development cannot be squared with the need to protect the park’s unique surface aesthetic, that is precisely the sort of environmental policy that DEP is required to acknowledge and to which it must conform its own conduct.

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EPA seeks information on ‘fracking’ chemicals

Well site during active drilling to the Marcelllus Shale formation in Upshur County, West Virginia, in 2008. Photo copyright West Virginia Surface Owners Rights Organization.

Here’s the latest from U.S. EPA about Marcellus shale drilling:

The U.S. Environmental Protection Agency (EPA) today announced that it has issued voluntary information requests to nine natural gas service companies regarding the process known as hydraulic fracturing. The data requested is integral to a broad scientific study now underway by EPA, which Congress in 2009 directed the agency to conduct to determine whether hydraulic fracturing has an impact on drinking water and the public health of Americans living in the vicinity of hydraulic fracturing wells.

In making the requests of the nine leading national and regional hydraulic fracturing service providers – BJ Services, Complete Production Services, Halliburton, Key Energy Services, Patterson-UTI, PRC, Inc., Schlumberger, Superior Well Services, and Weatherford – EPA is seeking information on the chemical composition of fluids used in the hydraulic fracturing process, data on the impacts of the chemicals on human health and the environment, standard operating procedures at their hydraulic fracturing sites and the locations of sites where fracturing has been conducted. This information will be used as the basis for gathering further detailed information on a representative selection of sites.

“This scientifically rigorous study will help us understand the potential impacts of hydraulic fracturing on drinking water – a concern that has been raised by Congress and the American people. By sharing information about the chemicals and methods they are using, these companies will help us make a thorough and efficient review of hydraulic fracturing and determine the best path forward,” said EPA Administrator Lisa P. Jackson. “Natural gas is an important part of our nation’s energy future, and it’s critical that the extraction of this valuable natural resource does not come at the expense of safe water and healthy communities. EPA will do everything in its power, as it is obligated to do, to protect the health of the American people and will respond to demonstrated threats while the study is underway.”

Hydraulic fracturing is a process in which large volumes of water, sand and chemicals are injected at high pressures to extract oil and natural gas from underground rock formations. The process creates fractures in formations such as shale rock, allowing natural gas or oil to escape into the well and be recovered. During the past few years, the use of hydraulic fracturing has expanded across much of the country.

EPA announced in March that it will study the potential adverse impact that hydraulic fracturing may have on drinking water. To solicit input on the scope of the study, EPA is holding a series of public meetings in major oil and gas production regions to hear from citizens, independent experts and industry. The initial results of the study will be announced in late 2012. EPA will identify additional information for industry to provide – including information on fluid disposal practices and geological features – that will help EPA carry out the study.

EPA has requested the information be provided on a voluntary basis within 30 days, and has asked the companies to respond within seven days to inform the agency whether they will provide all of the information sought. The data being sought by the agency is similar to information that has already been provided separately to Congress by the industry. Therefore, EPA expects the companies to cooperate with these voluntary requests. If not, EPA is prepared to use its authorities to require the information needed to carry out its study.

EPA is currently working with state and local governments who play an important role in overseeing and regulating fracturing operations and are at the forefront of protecting local air and water quality from adverse impacts.

WVDEP looking to beef up drilling permits

Well site during active drilling to the Marcelllus Shale formation in Upshur County, West Virginia, in 2008. Photo copyright West Virginia Surface Owners Rights Organization.

Here’s a report just in from Vicki Smith at The Associated Press:

MORGANTOWN, W.Va. (AP) — The state’s top environmental official says West Virginia will likely need a two-tiered regulatory system to properly permit and monitor the proliferation of Marcellus shale and other horizontally drilled gas wells.

Department of Environmental Protection Secretary Randy Huffman said his agency’s ongoing review of the Division of Oil and Gas also suggests the state needs more rigorous oversight of horizontal drilling operations because complying with industry-accepted best management practices isn’t good enough.

Future permitting may require more detailed engineering, certifications and other “site-specific thought and planning,” Huffman told The Associated Press in an interview Thursday.

Conventional, shallow drilling and deep horizontal Marcellus drilling are different industries, “and we’re recognizing that we may end up with two different regulatory programs — with a little overlap, but not a lot,” he said.

The two-tiered approach would spare conventional drillers an undue regulatory burden, he said.

The Marcellus shale field is a rich natural gas reserve underlying Ohio, West Virginia, Pennsylvania and New York. The gas is locked in tightly compacted rock a mile underground, and freeing it requires horizontal drilling technologies.

In June, Huffman said the number of Marcellus wells being permitted was growing faster than the DEP’s ability to keep pace. Eighteen inspectors, he said, were not enough to handle both more than 1,000 new wells and tens of thousands of traditional wells.

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W.Va. lawmakers push more drilling on public land

Larry Messina at The Associated Press took a look over the weekend at the push by some West Virginia lawmakers to allow more oil and gas drilling on the state’s public lands.

The AP story focused on opportunities for the state to raise revenues by leasing more drilling rights in state forests:

Senate Finance Chairman Walt Helmick, who helped lead the discussion during interims, said gas leases could provide a serious revenue boost for that agency.

With the state budget still weathering the effects of the latest recession, the DNR is projected to spend around $86 million from general revenue taxes, federal funds, lottery proceeds, and such special sources as permits and fees this budget year. The agency also oversees state parks and wildlife-management areas among its various duties.

“They’re here looking for money today, and they have a significant resource in minerals,” said Helmick, D-Pocahontas. “We also want to determine how much wealth is out there.”

Not mentioned in the story, but worth considering, is the ongoing case over drilling proposed for Chief Logan State Park (see here, here and here). State parks and forests are different animals, and by statute are managed differently. But it’s still worth noting the pressure for more resource extraction from the state’s public lands.

The Chief Logan drilling case will be heard by the state Supreme Court on Sept 22, and you can download all of the briefs here.

Well site during active drilling to the Marcelllus Shale formation in Upshur County, West Virginia, in 2008. Photo copyright West Virginia Surface Owners Rights Organization.

Environmental problems associated with oil and gas drilling in the Marcellus Shale continue to get a lot of attention across the region and in West Virginia.

Just last week, the U.S. Environmental Protection Agency postponed one public meeting on its study of hydraulic fracturing because of worries about the size of the crowd — perhaps 8,000 people or more — expected. EPA is working on plans to reschedule.

In West Virginia, Vicki Smith at The Associated Press did a story about the industry’s complaints regarding a proposal that drillers have to come up with plans and post bonds for repairing any damage they do to small rural roads.

Meanwhile, Pam Kasey of The State Journal reported that the state Division of Highways plans to begin using gas well brine to treat West Virginia highways this winter.  Pam explained:

With regard to salts, the agreement sets maximum concentration levels for chloride and sodium and a minimum level for the combination of those salts and calcium — all related to the brine’s freezing temperature.

With regard to other aspects of natural gas well brine, the memo establishes levels for pH, iron, barium, lead, oil and grease, benzene and ethylbenzene.

For each new source of brine to be used on roadways, DOH has to submit an analysis of these criteria to the DEP.

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